Section 56(2)(x): Stamp Value on Booking Date to Apply – ITAT Deletes Addition

Harsha Rajan Mehrotra Vs NFAC/Circle (ITAT Mumbai)

The Mumbai ITAT deleted the addition of ₹29.22 lakh made under Section 56(2)(x), holding that stamp duty value as on the date of booking/allotment (and not registration) must be adopted where consideration is fixed earlier and payments are made through banking channels.

The AO had taxed the difference between:

• Purchase consideration: ₹80.92 lakh
• Stamp duty value (on registration): ₹1.10 crore

treating ₹29.22 lakh as income.

However, the Tribunal noted:

• The property was booked in 2012, and consideration was substantially fixed then,
• Initial payment was made through banking channels, satisfying proviso conditions,
• Increase in stamp value was only due to passage of time and rise in ready reckoner rates.

The ITAT held:

• First proviso to Section 56(2)(x) applies when:
  • Agreement date ≠ registration date, and
  • Consideration (or part) paid through banking channels,
• Allotment letter/booking qualifies as “agreement”, not just registered agreement,
• Hence, stamp duty value on booking date must be adopted.

The Tribunal rejected CIT(A)’s approach that relied on “date of receipt/transfer”, holding that specific proviso overrides general interpretation.

Accordingly, the addition was deleted in full.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi[hereinafter referred to as “CIT(A)”], dated 23.09.2025 for the assessment year 2020–21, arising out of the assessment order passed by the Assessing Officer under section 143(3) read with section 144B of the Income-tax Act, 1961 [hereinafter referred to as “the Act”]dated 24.03.2023.

Facts of the Case

2. The assessee is an individual who filed her return of income under section 139 of the Act on 24.12.2020 declaring total income of Rs. 10,48,080/-. The case was selected for limited scrutiny under CASS for the purpose of verifying the applicability of provisions of section 56(2)(x) of the Act. Notices under section 143(2) and section 142(1) were issued from time to time, and the assessee furnished submissions along with documentary evidences which were examined by the Assessing Officer.

3. During the course of assessment proceedings, it was observed on the basis of information received from the Sub-Registrar office that the assessee had purchased an immovable property being residential Flat No. 1006 situated at Auris Bliss, Malad (West), Mumbai for a consideration of Rs. 80,92,750/-. However, the stamp duty value of the said property as determined by the stamp valuation authority was Rs. 1,10,14,997/-, resulting in a difference of Rs. 29,22,247/-. The Assessing Officer further noted that the assessee had paid stamp duty on the said higher value at the time of execution of the purchase deed. In response to the show cause notice, the assessee submitted that the difference between the agreement value and the stamp duty value was on account of the time gap between the date of booking of the property i.e. 16.01.2012 and the date of execution of agreement i.e. 15.01.2019 and registration on 20.04.2019. It was explained that the ready reckoner value at the time of booking and allotment was significantly lower, being Rs. 52,46,703/- as on 16.01.2012 and Rs. 76,41,653/- as on 25.08.2016, and therefore the consideration of Rs. 80,92,750/- was justified. The assessee contended that the excess stamp duty value was merely notional and arose due to escalation in valuation over a period of about seven years, and accordingly the same was not offered to tax under the head “Income from other sources”. The assessee also furnished supporting documents including allotment letter, booking receipt and bank statements evidencing payments made to the developer.

4. The Assessing Officer, however, rejected the explanation of the assessee by observing that the provisions of section 50C read with section 56(2)(x)(b) of the Act mandate adoption of stamp duty value where the consideration is less than such value as on the date of transfer. Accordingly, the Assessing Officer treated the stamp duty value of Rs. 1,10,14,997/- as the purchase value and brought the difference of Rs. 29,22,247/- to tax under the head “Income from other sources” under section 56(2)(x)(b) of the Act. The total income was thus assessed at Rs. 39,70,327/- and penalty proceedings under section 270A were initiated.

5. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). The assessee raised various grounds contending that the addition under section 56(2)(x) was erroneous, that the stamp duty value as on the date of booking ought to have been considered, that the increase in valuation was due to lapse of time, and that the Assessing Officer had not referred the matter to the Departmental Valuation Officer. It was also contended that the assessment order was passed in violation of principles of natural justice. During the appellate proceedings, the assessee filed written submissions along with documentary evidences reiterating that the transaction had originated at the time of booking in the year 2012 and that the subsequent increase in stamp duty value was merely on account of escalation in government ready reckoner rates. The assessee also relied upon judicial precedents to contend that for the purposes of section 56(2)(x), the relevant date for determination of value should be the date of agreement or booking where consideration had been substantially paid. The CIT(A) held that the triggering event for the applicability of section 56(2)(x)(b) is the “receipt” of immovable property, which is to be understood as the stage when rights in the property are transferred. It was further held that the provisions of the Act do not permit adoption of value as on the date of booking in the absence of satisfaction of statutory conditions, and that the Assessing Officer had rightly adopted the stamp duty value as on the relevant date. The CIT(A) accordingly confirmed the addition of Rs. 29,22,247/- made by the Assessing Officer and dismissed the appeal of the assessee.

6. Being aggrieved by the order of the learned CIT(A), the assessee is in further appeal before us and has raised the following grounds of appeal:

1. On the facts and circumstances of case and in law, the Ld. CIT has erred in confirming the Assessment Order passed by the Ld. AO under section 143(3) of Income Tax Act which is passed against the principal of natural justice.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT has erred in confirming the addition of Rs.29,22,247 /- made by the Ld. AO being the difference between the stamp duty value on the date of agreement being Rs.1,10,14,997/- and the agreement value of Rs.80,92,750l-.

3. On the facts and in the circumstances of the case and in law, the Ld. CIT has erred in confirming the addition made by the Ld. AO without considering the fact that the assessee had made a payment on the date of booking and hence the stamp duty value as on the date of booking should have been considered which is Rs.52,46,703l- only.

4. On the facts and in the circumstances of the case and in law, the Ld. CIT has erred in confirming the addition made by the Ld. AO without referring the case to the Departmental Valuation Officer as there is a huge difference between the stamp duty value and the agreement value.

5. The Appellant craves leave to add amend and or delete any of the above grounds of appeals.

7. The learned Authorised Representative (AR), at the time of hearing before us, reiterated the facts and drew our attention to the submission of the assessee before lower authorities that the property was originally booked on 16.01.2012 when the market value of the said flat was Rs.52,46,703/-.Further it was submitted that on the date of allotment the assessee was allotted flat no. 1/1312. However as there was an increase in FSI and height of the building the allotted flat was changed to 2/0406 in 2014 and finally to 1006 in 2016 which is the flat under dispute in this appeal. It was further submitted that the increase in stamp duty value was only on account of passage of time and revision in ready reckoner rates, as the agreement was executed on 15.01.2019 and registered on 20.04.2019, i.e., after a gap of about seven years from the date of booking. In support of this contention, the learned Authorised Representative further invited our attention to the allotment letter placed at page No. 15 of the paper book, wherein the initial payment of Rs. 16,28,500/- made by the assessee at the time of booking was duly recorded. It was further pointed out that the said payment stands corroborated by the corresponding receipt dated 16.01.2012, placed at page No. 54 of the paper book, evidencing that the consideration for the property had in fact commenced at the time of booking itself. Relying on the aforesaid documents, the learned AR submitted that the transaction between the assessee and the developer stood crystallised on the date of booking, and therefore, the value prevailing at that point of time ought to be considered for the purposes of section 56(2)(x) of the Act.

8. The learned AR further invited our attention to the provisions of section 56(2)(x)(b) of the Act and, in particular, to the first proviso thereto. It was submitted that the statute itself provides a specific relaxation in cases where the date of agreement fixing the consideration and the date of registration are not the same. It was further emphasised that the said proviso is subject to the condition contained in the subsequent proviso, namely that the whole or part of the consideration should have been paid by way of account payee cheque, bank draft or through banking channels on or before the date of agreement. Relying upon the statutory provision, the learned AR submitted that in the present case, the consideration stood substantially fixed at the time of booking itself and payments had been made through banking channels, as evidenced by the allotment letter and payment receipts placed on record. It was thus contended that the case of the assessee squarely falls within the ambit of the first proviso to section 56(2)(x)(b), and therefore, the stamp duty value as on the date of agreement or booking ought to have been adopted instead of the value prevailing on the date of registration. In support of the contention relating to applicability of the first proviso to section 56(2)(x)(b) of the Act, the learned AR placed reliance on various judicial precedents, and in particular drew our attention to the decision of the Coordinate Bench in the case of Cherie Tandon Saldahna vs. DCIT [ITA No. 6576/Mum/2025].

9. The learned Departmental Representative, on the other hand, strongly relied upon the orders of the lower authorities and invited our attention to the detailed findings recorded by the learned CIT(A), particularly para 6 of the appellate order. It was further highlighted that the learned CIT(A) has observed that the concept of “receipt” under the Act includes acquisition of rights in the property, and that once complete control over the property is transferred, the relevant date for determining taxability would be the date of such contract. The learned CIT(A) has also made reference to section 2(47)(v) of the Act to explain the concept of transfer and has held that the legislative intent behind section 56(2)(x) is to bring to tax such transactions at an appropriate stage so as to prevent leakage of revenue.

10. We have carefully considered the rival submissions, perused the orders of the lower authorities and the material placed on record. The issue involved in the present appeal lies in a narrow compass, namely, whether for the purposes of section 56(2)(x)(b) of the Act, the stamp duty value as on the date of registration is to be adopted, as held by the Assessing Officer and confirmed by the learned CIT(A), or whether the stamp duty value as on the date of booking/allotment is to be considered in terms of the first proviso to section 56(2)(x)(b), as contended by the assessee.

11. The undisputed facts emerging from the record are that the assessee had initially booked the residential flat on 16.01.2012 and made payment of Rs. 16,28,500/- on the said date, which stands duly evidenced by the allotment letter and receipt placed in the paper book. It is further not in dispute that the consideration for the property stood substantially determined at the time of booking and was subsequently revised to Rs. 80,92,750/- upon allotment on 25.08.2016. The agreement for sale was executed on 15.01.2019 and the property was registered on 20.04.2019, at which point of time the stamp duty value was Rs. 1,10,14,997/-. The Assessing Officer has invoked the provisions of section 56(2)(x)(b) and brought to tax the difference of Rs. 29,22,247/-.

12. The primary contention of the assessee is that the transaction had crystallised at the time of booking/allotment and that the increase in stamp duty value is merely on account of passage of time and revision of ready reckoner rates, and therefore, the stamp duty value as on the earlier date ought to be adopted in terms of the first proviso to section 56(2)(x)(b) of the Act. At this stage, it is apposite to refer to the statutory provision. The first proviso to section 56(2)(x)(b) provides that where the date of agreement fixing the amount of consideration and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of the said clause. The second proviso further stipulates that such benefit shall be available only where the consideration or part thereof has been paid by way of banking channels on or before the date of agreement.

13. In the present case, from the material placed on record, it is evident that the assessee had made payment through banking channels at the time of booking itself, which is evidenced by the allotment letter and receipt dated 16.01.2012. The consideration stood determined at that stage and the subsequent agreement merely formalised the earlier understanding between the parties. Therefore, the condition prescribed in the second proviso stands duly satisfied.

14. The next question which arises is whether the allotment letter/booking can be regarded as an “agreement” for the purposes of the first proviso.

15. In our opinion, the expression “agreement to sell” for the purposes of the first proviso to section 56(2)(x)(b) has to be understood in a practical and commercial sense, keeping in view the object of the provision as well as the surrounding statutory scheme. Section 56(2)(x)(b) is a deeming provision which seeks to tax the difference between the stamp duty value and the consideration in cases of receipt of immovable property. However, the Legislature, being conscious of practical realities in real estate transactions, has carved out an exception through the first and second provisos, whereby the stamp duty value as on the date of “agreement” is to be adopted where the consideration stands fixed earlier and payments have been made through banking channels. In this context, the term “agreement” used in the proviso cannot be construed in a narrow or technical sense so as to confine it only to a formally executed and registered agreement for sale. If such a restrictive interpretation is adopted, the proviso itself would be rendered otiose in a large number of genuine transactions, particularly in cases of under-construction properties where the transaction commences with booking and allotment, followed by staged payments, and culminates in execution of a registered agreement at a much later date.

16. This issue is no longer res integra. The Coordinate Bench in the case of Cherie Tandon Saldahna vs. DCIT (Supra) has, discussing various judicial precedents, categorically held that the allotment letter issued by the builder, pursuant to booking and payment of consideration through banking channels, constitutes an “agreement to sell” for the purposes of section 56(2)(x)(b). It has been further held that in such circumstances, the stamp duty value as on the date of allotment is required to be adopted and not the value as on the date of registration.

17. Respectfully following the aforesaid decision, and in view of the factual matrix of the present case, we are of the considered view that the allotment/booking of the flat in the year 2012, coupled with payment through banking channels, constitutes an agreement fixing the consideration for the purposes of the proviso to section 56(2)(x)(b).

18. We further find that the reasoning adopted by the learned CIT(A) proceeds on a general interpretation of the term “receipt” and the concept of transfer under section 2(47)(v), without appreciating the specific statutory carve-out provided in the provisos to section 56(2)(x)(b). Once the conditions prescribed in the provisos are satisfied, the statute itself mandates that the stamp duty value as on the date of agreement is to be adopted. The general concept of “receipt” cannot override the specific provision contained in the proviso.

19. In view of the above discussion, we hold that the assessee is entitled to the benefit of the first proviso to section 56(2)(x)(b) of the Act, and accordingly, the stamp duty value as on the date of booking/allotment is required to be considered for the purpose of determining any addition under the said provision.

20. Accordingly, the addition of Rs. 29,22,247/- made by the Assessing Officer and confirmed by the learned CIT(A) is not sustainable and is hereby deleted.

21. In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 16.04.2026.